Thursday

28th Mar 2024

Diesel tax hike plan highlights internal commission rift

  • EU commissioners had a long and lively debate on the proposal (Photo: europa.eu)

The European Commission has tabled a controversial bill to raise the minimum duty on diesel from 2012, aimed at stamping out so-called fuel tourism and decreasing air pollution.

But even after three weeks of internal struggle, the college of commissioners failed to speak with one voice, with the Lithuanian EU budget commissioner Dalia Grybauskaite officially opposing the plan.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"Today's decision is fully in line with results of the last European Council... which put environment even higher on political agenda," EU tax commissioner Laszlo Kovacs said, defending his own proposal.

Mr Kovacs's paper suggests harmonizing the minimum level of excise duties at €359 per 1,000 litres of diesel in 2012 and subsequently at €380 in 2014, something which would force 21 EU states to increase their current rates.

"Such a move will firstly, contribute to decrease CO2 emissions and secondly, improve the functioning of the internal market," Mr Kovacs said while describing the internal debate among commissioners as long and lively.

Currently, the haulage sector takes advantage of large differences in national excise duties – varying from €220 to €693 – with big trucks making detours from their routes and filling up in a state where it is cheapest. This so-called fuel tourism generates more emissions and losses in some EU states coffers, the Hungarian commissioner underlined.

For example, fuel tourism cost Germany – believed to be the strongest advocate of the tabled proposal - €1.9 billion in 2004, as excise duties represent roughly between 30 to 60 percent of the pump price and are responsible for six to 18 percent of the running costs of a road haulage business.

In addition, the haulage sector alone counts for 19.3 percent of the CO2 emissions in the EU-25, while it is expected that the shift from the "do nothing" option to the current proposal would see a CO2 emissions reduction of 38.7 percent.

Firm opposition from EU budget commissioner

But Mr Kovacs' arguments seem not to have any impact on EU budget commissioner Dalia Grybauskaite, who refused to give her blessing to the plan.

Previously during the drafting process, four other commissioners - Charlie McCreevy (internal market), Danuta Hübner (regional policy), Siim Kallas (administrative affairs) and Viviane Reding (information society) - lined up together to oppose any tax rise.

Mrs Grybauskaite, a former finance minister in Lithuania, told EUobserver last week that she was "against proposals which do not have a macroeconomic assessment and are not fitting into overall EU taxation strategy."

"I'm against ecological populism which now has become very modern and everything you want to push through you highlight by referring to ecological influence," Mrs Grybauskaite also said, hinting the document may not have a long lifetime.

EU tax commissioner Laszlo Kovacs shook off those statements by saying "I have referred my colleague to the exact paragraphs in the impact study."

However, Mr Kovacs is likely to experience a similar battle with some EU capitals, who have argued that a further rise in diesel tax would translate into the overall increase of prices and inflation, possibly creating a delay of eurozone entry for some new member states.

"If I tabled a proposal only if I'm one-hundred percent sure it will gain unanimity, I would not propose anything during the entire five-year term in office," Mr Kovacs said, adding he will work towards unanimous support by all member states, as required.

In fact, Mr Kovacs has already made one concession in advance, as the paper pledges to respect existing transitional periods - currently enjoyed by some member states - while granting them two extra years to adjust to the increase after the transitional period expires.

EU plans for diesel tax hike spark fierce opposition

The European Commission is locked in an internal struggle over whether to raise the minimum duty on diesel fuel from 2012, with several EU capitals preparing for a similar battle, if the proposal is eventually adopted by the college of commissioners next week.

'Swiftly dial back' interest rates, ECB told

Italian central banker Piero Cipollone in his first monetary policy speech since joining the ECB's board in November, said that the bank should be ready to "swiftly dial back our restrictive monetary policy stance."

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us